Pound sterling maintains its recent gains against the US dollar at 1.2770 ahead of the US labor market data for November, which scheduled to be release at 13:30 GMT.
On Friday, the GBP outperformed its major peers due to concerns expressed by Bank of England (BoE) officials regarding the persistence of price pressures. Megan Greene, an external member of the BoE Monetary Policy Committee (MPC), stated on Thursday that UK inflation may continue to exceed the 2% target in the medium run because it is “fundamentally more persistent,” according to Bloomberg.
Megan Greene, a BoE hawk, cautioned Thursday that UK inflation might stay above the 2% target for the medium run.
The Megan Green’s skepticism about the central bank’s ability to control inflation supported by the presumption that wage growth would continue. Greene stated, “Wage growth is not decreasing as rapidly as I would like.”
Although he certain that the disinflation process was well-established, BoE Governor Andrew Bailey stressed on Wednesday that the central bank still has some work to do to lower inflation below the bank’s target of 2%.
Due to the lack of important UK economic data in the near future, market speculation regarding the BoE’s anticipated interest rate decision at its monetary policy meeting on December 19 will determine the value of the pound sterling. Traders anticipate that interest rates at 4.75% will remain unchanged by the BoE.
Daily Market movers: Ahead of the US NFP, the pound sterling maintains its gains against the US dollar
During Friday’s European trading hours, the value of the pound sterling maintains its gains against the US dollar (USD) at around 1.2770. Following the release of the United States (US) Initial Jobless Claims data for the week ending November 29, which revealed that the number of people filing for unemployment benefits for the first time rose to 224K against the estimates and the reading of 215K the week before, the Pound pair saw a significant increase on Thursday.
Before the US Nonfarm Payrolls (NFP) data for November are released at 13:30 GMT, the Cable is anticipated to trade quietly. Investors will closely monitor the United States. official labor market data in order to obtain new indications regarding the possibility of interest rate cuts by the Federal Reserve (Fed) during its policy meeting on December 18. Concerned about declining labor demand and optimistic that inflation would return to the bank’s target of 2%, the Fed began its policy-easing cycle in September.
US economy added 200K new workers, which a lot more than the 12K increase that observed in October.
According to economists, the US economy added 200K new workers, which a lot more than the 12K increase that observed in October. Due to labor strikes at Boeing plants and the impact of the hurricanes on certain industries, payroll growth was much slower last month. According to estimates, the unemployment rate rose from 4.1% to 4.2%.
The Average Hourly Earnings data, a crucial indicator of wage growth, will also be of interest to investors to have grown 3.9% year-over-year, which was less than 4% in October. From the previous reading of 0.4%, the wage growth measure estimated to have increased at a slower rate of 0.3% on a monthly basis.
Investors anticipate that the Fed will lower interest rates by 25 basis points during its December 18 policy meeting.
The Federal Reserve (Fed) would increase its dovish bets for the policy meeting on December 18 if there were indications of a slowdown in labor demand and moderate wage growth. Strong job data, on the other hand, would make them weaker. According to the CME FedWatch tool, there currently a 72% chance that the Fed will lower interest rates by 25 basis points (bps) to 4.25%-4.50% this month, with the remaining 72% favoring keeping interest rates unchanged.Amid concerns about ongoing UK inflation, the value of the pound sterling rises.
